Year-on-year inflation in March and April is expected to rise mainly because of unseasonal rains, the Central Bank Governor, Mr Ajith Nivard Cabraal, has said.

In an interaction with Indian journalists here recently, he said the inflation in March will “certainly be lower than that of the preceding months.”

The Central Bank, in a release, said on Monday that inflation increased in the beginning of the year, mainly due to the rise in prices of food items, primarily owing to supply disruptions caused by the adverse weather conditions that prevailed in major producing areas.

CPI may fall

“The (consumer price) index is expected to decrease in March compared to that in February .

“However, inflation on year-on-year basis is likely to increase to around 8 per cent in March , due to the low base in March 2010. Meanwhile, a marginal increase in the annual average inflation is also estimated.

“The upward trend is expected to continue in Aprilas well, mainly due to the festive demand and the base impact,” the Bank said.

Year-on-year inflation is expected to decelerate from May onwards to reach 6 to 7 per cent by the year end, although annual average inflation may follow an increasing trend during the balance period of the year to record around 7 per cent by December 2011.

The performance in the key sectors of the economy has raised the prospects for high economic growth in 2011, which would contribute positively towards containing inflation.

However, unpredictable weather conditions could cause temporary price increases.

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